Cannabis is one of the fastest-growing sectors in the United States, despite official prohibition. According to the most recent Gallup poll, 68% of Americans say that marijuana should be legalized, and 18% of Americans now admit to smoking it, up from 10% in 2005.
The sector has experienced several prosperous years, and 2021 was no exception. This year, Connecticut, New Mexico, New Jersey, New York, and Virginia all legalized the use of marijuana by adults.
Although Congress failed not to pass a bill to fully legalize marijuana, there were some positive developments. The Safe Banking Act, which would have provided the business with better access to the banking system and ended the harsh tax law to which the industry is currently subject, passed the House for the sixth time but did not pass the Senate.
In July, Senate Majority Leader Chuck Schumer and his colleagues Senators Ron Wyden and Cory Booker released a suggested text of their much-anticipated measure that would eliminate the decades-long prohibition of cannabis in the United States. In October, South Carolina freshman Representative Nancy Mace, a Republican, formally submitted a bill that would also eliminate the federal prohibition on marijuana. The bill has attracted support from the business. Mace’s bill is highly business-friendly, with a suggested 3% tax rate and support from organizations as diverse as NORML and Americans for Prosperity.
Since 1996, when California became the first state to allow medicinal marijuana, marijuana legalization has quietly spread across the United States. Currently, 18 states permit recreational usage, and 37 states permit medical use. According to Cowen analysts, legal sales will reach $25 billion in 2021 and will climb to $100 billion by the end of the decade.
This year will be significant, according to Matt McGinley, a cannabis analyst at Needham.
“Because this sector is in its infancy, every year should be a turning point,” adds McGinley. “The industry will continue to experience a very robust growth rate, and a number of significant markets will legalize adult-use cannabis in 2022 or 2023.”
McGinley indicates that federal legalization in 2022 is improbable.
“SAFE Banking is the best hope for federal change,” he adds, adding that it has a 50/50 chance of passing this year. I would not say there is no chance for more comprehensive reform at the federal level, but there is minimal prospect if SAFE does not succeed.
If Congress cannot agree on SAFE Banking, which has bipartisan support, then it is doubtful that Congress will enact a law abolishing prohibition, according to McGinley.
A report authored by Cowen analysts, including Vivien Azer, who leads the firm’s cannabis coverage, and Jaret Seiberg, an analyst at Cowen’s Washington research department, outlines a route for 2022 federal legalization.
“We continue to view Washington’s legalization of cannabis as a matter of when, not if,” the report states, “and it is possible this could occur in 2022, either as a result of bipartisan legislation ahead of the November midterm elections or possibly during the lame duck period that will begin in November 2022 and end in January 2023 when a new Congress is convened.”
Analysts at Cowen feel that Mace’s States Act is “possible.”
Seiberg said in a separate report that he believes Senate Majority Leader Schumer will formally propose his cannabis legalization measure this year, but he is not optimistic about its chances of success.
Seiberg noted, “We do not expect that to garner the ten required Republican votes in the Senate, but its defeat should pave the way for a more moderate compromise package.” The deal could contain the SAFE Act, as predicted by McGinley.
Even though federal reform on a big scale is uncertain, more states are projected to legalize adult usage this year.
McGinley predicts that in 2022, several states will legalize marijuana.
Rhode Island, which approved medical marijuana in 2006, is nearing the legalization of recreational usage.
Rhode Island House Speaker K. Joseph Shekarchi told the Providence Business News, “We’re very close to being able to unveil the framework of a measure in the month of January, which will initiate a thorough public hearing and vetting process.”
Michael J. McCaffrey, leader of the Senate majority, is sure that the bill will become law. McCaffrey told PBN, “Once it goes through the hearing process, I believe it will pass with overwhelming support in both chambers.”
In 2011, Delaware authorized medical marijuana, but efforts to legalize recreational marijuana halted in 2018. In June, the vote on House Bill 150, which would have taxed and regulated cannabis for adults aged 21 and older, was postponed. In January, legislators are anticipated to work on the bill.
This year, Oklahoma, which has one of the most lucrative and open medical marijuana markets, could also legalize adult usage. It is likely that voters will legalize adult use through a ballot initiative.
Other states are visible on the horizon, but their outcomes are less certain. Maryland might legalize via the legislative process, and Missouri could legalize by a voter initiative, but McGinley is less bullish about both of these states. Ohio and Pennsylvania are other possibilities, but according to McGinley, Ohio’s legislative approval procedure is “onerous” and the Pennsylvania legislature “doesn’t appear supportive” of legalizing cannabis for adult use.